Judge rules in WGA foreign levies case

Disbursement of funds to be closely monitored

A state court judge has finalized the settlement in the tangled 5-year-old WGA West foreign levies case — including a promise that he’ll closely monitor how those funds are distributed.

The consent decree was signed Friday by Los Angeles Superior Court Judge Carl West. It settles a 2005 suit, filed by William Richert (“Winter Kills”), which alleged that the Writers Guild of America had not properly handled foreign funds due scribes as compensation for reuse. The WGA is estimating it has paid at least $80 million of the foreign funds to writers.

West’s order requires the WGA to mail the consent decree to the 16,000 affected writers by June 21. Key points in the settlement:

The WGA has agreed to use its “best efforts” to pay all foreign funds within three years. It disclosed last year in its annual report that, as of March 31, 2009, it had $30.3 million in “funds held in trust for members,” including foreign levies, client trust accounts, undeliverable funds and a residuals trust fund — although it didn’t break out how much of that was from foreign funds.

The WGA will have to allow the foreign money to “escheat” to the state for works not covered under WGA contracts if it can’t locate the writers or their heirs after three years. However, West didn’t resolve the issue of what happens to the foreign money if the WGA can’t locate writers or heirs on covered works after three years.

A Big Four accounting firm will review the foreign levies from their inception in the early 1990s and issue a report analyzing how much has been collected and distributed.

The foreign levies program will be reviewed annually by the WGA West and included as part of its official annual report.

The WGA West will hire consultants for a one-time review to make recommendations on how to improve the processing and distribution of the funds.

The settlement doesn’t cover any employer association or representative, specifically naming the Motion Picture Assn. of America, the Alliance of Motion Picture & Television Producers and Fintage House — a Dutch-based company providing financial services to the entertainment industry such as rights collections for producers.

“The Court reserves jurisdiction over the parties concerning the construction, interpretation, implementation and enforcement of the amended settlement agreement and over the administration and distribution of settlement benefits of this judgment and order,” West wrote.

The final settlement, which followed extensive objections to last fall’s preliminary settlement, is much narrower than the WGA had sought. It covers only the 50% of funds that foreign collecting societies have allocated to the WGA for distribution to writers — but not the 50% of funds allocated to producers under agreements approved by the WGA but never submitted to members for ratification.

As a result, writers can still pursue other legal avenues on how the foreign levies are handled. West’s order specifically notes that it doesn’t cover claims based on the allegation that the guild “improperly allowed” any portion of writer levies to be directed or paid to production companies.

The final settlement also leaves open the question of disposition of foreign funds paid to writers of covered works if the WGA can’t locate the writer or heirs after three years. The WGA had sought to retain those funds but West said in the order that he would retain jurisdiction in that area.

Finally, the consent decree was also revised to include the provision that class members will be able, upon request, to obtain the consultants’ report on the foreign levies program.

Only 14 writers opted out of the settlement after 16,600 mailed notices and 6,000 emails were sent following last fall’s preliminary approval. Objections were filed by WGA members Art Eisenson and Eric Hughes, non-member Stefan Avalos along with two organizations — Local 839 of the Intl. Alliance of Theatrical and Stage Employees and the Australian Writers Guild Authorship Collecting Society.

The final settlement was expanded to include 63 members of the Australian group.